June 20: 7 Minnesotans indicted as a fraud ring that stole $1M

Article by: Paul McEnroe

Star Tribune

June 20, 2014 - 12:39 PM

Seven Minnesotans were indicted on federal fraud charges Thursday, accused of participating in a ring that stole more than $1 million over several years by stealing consumers’ banking information, passing counterfeit checks and collecting fraudulent tax refunds.

The operation targeted at least 15 financial institutions across Minnesota, as well as various gas station and drugstore chains, according to court documents.

Federal and state authorities who cracked the ring said it operated under a Mafia-style hierarchy, with a “captain” directing a lower tier of runners who carried out various acts of fraud at banks or businesses. They said the fraud typically began with the theft of a consumer’s identifying information, such as a Social Security number or birth certificate. The ring then used it to obtain documents — such as a driver’s license — that would enable them to open a bank account and draw money by passing counterfeit checks.

The indictments represent just the tip of a much larger ID-theft operation, U.S. Attorney Andy Luger said Thursday. “What many think of as isolated incidents of stolen personal information are often part of organized criminal activity in the Twin Cities.”

Authorities said members of the ring were adept at spotting weak links in banking practices and were able to easily obtain high-quality printing equipment and paper stocks to create checks that appear legitimate.

One of the leaders, Lindsey, created false documents using check-printing software on his home computer and printer, according to the indictment against him. He had at least 20,000 stolen checks that had already been negotiated under the guise of legitimate transactions, documents show. Additionally, the indictment says, he was involved in submitting more than 40 fraudulent tax claims for refunds totaling more than $270,000.

“This type of crime continues to increase in complexity, and the impact to our economy grows every year,” said Louis Stephens, special agent in charge of the U.S. Secret Service branch in Minneapolis. “Identity theft and related crimes are the ‘crime wave’ of today.”

Federal agents and officers connected with the Minnesota Financial Crimes Task Force said hundreds of attempts are made every week to defraud banks in Minnesota, adding that there is no annual estimate on the dollar amount of losses suffered by financial institutions.

Investigators said that low-level “runners” belonging to a certain fraud “pod” were typically directed by a captain to fan out across a portion of the metro area and commit acts of fraud in quick-hit fashion before banks or customers realized they were victims.

The case disclosed Thursday is an offshoot of a massive international investigation that originated in 2009 under the task force’s auspices. At the time, two Edina police officers began to track small strands of area bank fraud, which, by the investigation’s conclusion in 2012, led to an estimated $50 million in thefts worldwide.

When the leader of that ring was arrested in California in 2010, agents found a storage locker containing 8,700 stolen identity documents, 500 credit cards, blank check stock, 140 passport photos and many Social Security cards.

The remnants of that case, known as Operation Starburst, led the task force and federal agents to begin tracking this current group of suspects, agents say.

“Victims of identity theft suffer profound and devastating consequences, and it often takes years to realize the full impact on their financial lives,” said Assistant U.S. Attorney Lola Velazquez-Aguilu in Minneapolis. “In putting a stop to those who choose to do harm in this way, we hope to send a strong message of deterrence.”